Trade tensions between the United States and China rose again on Monday after Beijing imposed export controls on a group of American companies, including two prominent underground companies that Washington has won in its bid to secure key minerals.
China’s Ministry of Commerce will now do just that forbid Chinese companies from selling “dual use” products to 10 US companies he says they are associated with the US military to “protect national security and interests.” The action was taken in response to the US Department of Defense recent decision adding nearly two dozen Chinese businesses—including automaker BYD, Alibaba Group, and Baidu—to the list of companies Washington says support China’s military.
Trade tensions between the United States and China rose again on Monday after Beijing imposed export controls on a group of American companies, including two prominent underground companies that Washington has won in its bid to secure key minerals.
China’s Ministry of Commerce will now do just that forbid Chinese companies from selling “dual use” products to 10 US companies he says they are associated with the US military to “protect national security and interests.” The action was taken in response to the US Department of Defense recent decision adding nearly two dozen Chinese businesses—including automaker BYD, Alibaba Group, and Baidu—to the list of companies Washington says support China’s military.
This is “China just playing with (US President Donald) Trump in a trade war,” said Jack Lifton, co-chairman of the Minerals Institute, which unites stakeholders in the industry.
By excluding two American companies that are central to the Trump administration’s rare earth push—MP Materials and USA Rare Earth—Beijing appears to be flexing its muscles and emphasizing the scale of its supply chain at a time when much of the world is struggling to isolate itself. China is a a rare behemothleading to about 90 percent of cleanup and about 95 percent of permanent magnet production, according to the International Energy Agency.
China is sending a “caution,” said Bryan Bille, policy analyst at Benchmark Mineral Intelligence.
Beijing has almost three times its use of export restrictions over the past five years, and this is not the first time that rare earths have sparked trade disputes between the United States and China. After the Trump administration announced tariffs against most of the world last year, Beijing hit him back and its restrictions on the export of rare earths, leading to many rounds of negotiations between the two countries. Both sides eventually agreed to a one-year trade deal that is set to expire at the end of this season.
The announced export restrictions come as the Trump administration has pumped billions of dollars into the informal sector as part of a broader effort by Washington to reduce US dependence on Chinese supply chains. Brand new restrictions and the Pentagon, which will start next year, will also limit where manufacturers can find certain magnets and metals from.
At the forefront of the Trump administration’s rare push is MP Materials, which owns the only operating underground mine in the United States and now counts the Defense Department as its own. the largest shareholder following a multi-billion dollar deal last year.
The Trump administration has also taken an equity stake USA Rare Eartha loss company which has been in commercial tension in its quest to become the biggest player in the sector. The contracts include those of the company availability of UK-based Less Common Metals, a producer of rare earth minerals and alloys, and announced purchase of Serra Verde, a Brazilian company that owns a rare earth mine and processing plant.
It was not immediately clear what the impact of the new sanctions would be on US companies, though, beyond a symbolic impact.
Those restrictions could create problems if MP equipment or USA Rare Earth acquired equipment from China, for example, but both companies “have gone to great lengths to avoid being connected to China in any way,” said Chris Berry, president of House Mountain Partners, an independent metals analysis consultant.said in an email to Foreign Policy.
Another issue could arise if any company uses Chinese technology to separate rare earths or produce magnets, “but it’s hard to tell what is Chinese technology and what is domestically grown,” Berry added.
China was not selling to MP Materials and USA Rare Earth however, given their role as “direct competitors to China’s rare earth industry,” according to Lifton of the Minerals Institute.
“China is just giving us a warning that they are paying attention to all this,” he said. “They will not allow exporters to sell to any American company they think is part of the military production and industrial complex.”
MP Materials and USA Rare Earth declined to comment.
